Observations on technology, politics, and life in the 21st century, in New York City and the world at large.

Monday, March 15, 2010

Loyalty and the Emotional Side of Customer Retention

I just finished SmartMobs (a recommended read) and came across a wonderful little anecdote. In Tokyo, one of the busiest intersections is Shibuya Crossing, where there is a bronze monument to a dog named Hachiko.Hachiko followed his owner, Professor Eisaboru Ueno, every day to the subway station and awaited there again that evening for his return.Professor Eisaboru died in 1925 and never made it back, yet Hachiko faithfully waited for him there every evening until 1934.Nine years, or sixty-three in dog years.It’s a touching story about loyalty.

And while the story pulls on my emotional heartstrings, it also leaves me in wonder.What made Hachiko come back every day for so long, hoping for a different result than the previous day?Is that just foolish?What made Hachiko so loyal in the first place?

On the web, I would argue that few things are more valuable than loyalty.With the breadth of services offered out there, you can buy books from someone else than Amazon, shoes from somewhere else than Zappos, movies from other services than Netflix.Often, it makes sense.

But the services that matter bring users back consistently and often without competitive consideration because of brand loyalty.And that’s what builds lasting value.It’s easy to buy traffic, just a click of the mouse.It’s really hard to build a service that people care about.If I were valuing a web company, the first thing I would ask for is repeat visits (visits per user per month, member retention/attrition, etc.).

So what builds lasting loyalty?There is utility and feel, the intellectual and emotional.

Apple has it through products that feel better.I don’t know if the roll wheel calendar on my iPhone is more efficient, but it’s more of a pleasure to use.I don’t think that the magnetic power cord in my Powerbook actually functions much better than a plug in, but the moment I connected them and the power chord literally jumped into the socket, I knew I was an Apple user for life.

FourSquare is another app that feels good.Its point system gives me that Pavlovian feedback, that slight burst of serotonin that makes me keep checking in.Intellectually I know it provides me no value.At the same time, I checked out Lewis Goldberg’s badge page and was actually kind of sad he had more than me.What do I really care about badges?

Now Apple provides me real utility.I am writing this on my Macbook Pro right now.FourSquare’s utility not so much, and I feel its hold waning on me.The gaming aspects have grown a bit old.I want more badges.New things unlocked.Feel can get stale.But if you mix positive feel with utility, maybe not even differentiated utility, then you get long-lasting loyalty.With every thing I do that’s helpful, I see it, more I feel it as a little bit more.A reinforcement of that initial joy, that satisfaction of a good product and of making a good choice.And that momentum gets a customer coming back for life.

Will I be using Apple products in 9 years?Who knows?But my stock portfolio is making a big bet for now that I will be.